Hardwood Floors December 2019/January 2020

By Robert L. Berger

BIGSTOCK ©

THERE ARE A FEW THINGS TO KEEP IN MIND WHEN CONSIDERING AGGREGATING TRADE OR BUSINESS INCOME:

for bonus depreciation. If corrected, lessees and building owners who improve qualifying business property will gain federal tax benefits of shorter depreciable lives, increased bonus depreciation deductions and Section 179 expensing. QIP has been further simplified to apply to interior common areas of nonresidential buildings if the improvement is placed in service after the building was first placed in service, can be owner occupied, and will not be subject to the three-year rule. PLAN AHEAD FOR 100 PERCENT BONUS DEPRECIATION THROUGH 2022 Qualified property acquired and placed in service after September 27, 2017 is eligible for 100 percent bonus depreciation, and applies to both new and used qualified property. Planning ahead to fully understand the potential tax impact of bonus depreciation is extremely important. After 2022, the amount of allowable bonus depreciation is then phased

down over four years: 80 percent will be allowed for property placed in service in 2023, 60 percent in 2024, 40 percent in 2025, and 20 percent in 2026. KEEP IN MIND SECTION 179 DEPRECIATION CAPPED AT $1 MILLION AGAIN IN 2019 An alternative to bonus depreciation is Section 179 expensing. The Tax Cuts and Jobs Act increased the expensing limit to $1 million, with a spending cap of $2.5 million of equipment purchases. The definition of qualified real property eligible for Section 179 expensing now includes roofs, HVAC equipment, fire protection, alarm systems, and security systems for nonresidential buildings. Taking advantage of these tips now can help your company reap the tax benefits at the end of the year. g Robert L. Berger, CPA/CGMA is a partner in Tax Services at Anders CPAs + Advisors. He works with closely held business owners on individual and corporate tax consulting and retirement planning, and is the firm’s Director of the Real Estate and Construction Group. He can be reached at rberger@ anderscpa.com.

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Once an aggregation election is made, it must be reported consistently in subsequent years. Newly created businesses may be added to an aggregated group, but existing businesses may not. You can make an initial election to aggregate trade or business income at any time, but if you fail to aggregate, you may not amend your tax return to aggregate after the 2018 taxable year. A statement must be filed with your personal tax return each year indicating your desire to aggregate trades or businesses for purposes of the QBI deduction.

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the magazine of the national wood flooring association

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